Understanding Contingencies in Cash Real Estate Deals

What is a Real Estate Contingency?

Title Contingency

Financing Contingency

Home Inspection Contingency

The home inspection is by far one of the most essential protection contingencies in a cash real estate deal. This phase of due diligence, which typically lasts three to 14 days, gives the cash home buyer York time to conduct inspections on the property to ensure it meets their purchasing standards. A home inspection will provide the buyer with a full report on the property, including any repairs and any issues that may develop. This provision gives the buyer and seller three options: accept the home in its existing condition, renegotiate with the opportunity to terminate the sale if an agreement is not fulfilled, or back out of the deal entirely.

Sale of a Previous Home Contingency

This protects buyers who require the cash proceeds from the sale of their current house to purchase a new home. With this clause, if the seller needs to sell their current home by the time limit indicated in the contract but cannot find a buyer, they can escape the contract. If a typical buyer cannot be located in time, a cash home buyer Lancaster or iBuyer, can make an immediate offer. Although buying activity has decreased recently, several markets remain hot enough that businesses are actively searching to purchase (and flip) homes.

Appraisal Contingency

Finally, there is the appraisal contingency, which is equally applicable to buyers acquiring a mortgage. A licensed appraiser will assess the home’s value and prepare a written report with the appraised value attached. The amount of money the bank loans will be determined by the property’s appraised value. The buyer must make up the difference if the appraisal amount is less than the home price.

For example, if a home appraises at $600,000 and the asking price is $625,000, the bank will only lend up to $600,000. This clause essentially gives buyers and sellers two options following the evaluation. You can negotiate the purchase terms with the option to cancel the transaction if an agreement is not met or to back out of a deal if the property’s appraisal price is less than the purchase price. Again, this contingency is one of the reasons why sellers prefer to work with companies that pay cash for houses York.

Selling to Cash Home Buyers to Avoid Contingencies

A cash house purchase in York doesn’t require you to worry about finance approval, appraisal, or inspection contingencies. Cash offers do not fall out of contract at the last minute due to flaws discovered during a buyer’s home inspection that they want the seller to repair or compensate for. They also do not rely on the buyer successfully obtaining finance loans. In traditional transactions, buyers frequently put financing contingencies in the purchase agreement, allowing them to back out of the transaction if they cannot obtain a mortgage.

This uncertainty can cause worry and anxiety for the seller, as the sale could fall through at any point during the process. In a cash home sale, the buyer has the funds available, removing the need for financing contingencies. Additionally, these buyers purchase distressed properties, meaning they don’t need an inspection to determine the condition of your home. This creates a sense of security and calm, as the sale is less likely to encounter financing-related or inspection issues.

Give us a call anytime at 484-484-0971 or fill out this quick form to get started today!